- The MMA has raised banks' weekly dollar supply by 51% for three weeks to help importers, especially SMEs, access foreign currency.
- Reduced dollar inflows stem from weaker tourism, with March arrivals down 20.7% year-on-year amid Middle East unrest.
- The MMA proposed amending the Foreign Currency Act to require resorts to convert 20% of revenue instead of USD 500 per tourist.
The Maldives Monetary Authority has increased the weekly supply of US dollars issued to banks by 51 per cent for the next three weeks, seeking to improve businesses’ access to foreign currency for imports amid continued pressure in the exchange market.
The increase is intended to ease funding constraints faced by importers, particularly small and medium-sized enterprises, and facilitate payments made through telegraphic transfers and letters of credit.
The measure forms part of a wider response to reduced foreign currency inflows since February. According to the MMA, the decline has been linked to weaker tourism activity following unrest in the Middle East, which affected visitor arrivals and the supply of dollars entering the economy.
Tourism Ministry figures show arrivals fell by 20.7 per cent year-on-year in March, with daily arrivals on some days declining by as much as 50 per cent. The decline in tourism receipts has added to pressure on the banking system’s ability to meet demand for foreign currency.
The Government had previously raised banks’ dollar allocation by 32 per cent during Ramadan to support imports of essential food items. A further 26 per cent increase was introduced in June to assist businesses during the tourism off-season.
Alongside measures to increase dollar availability, the MMA has proposed amendments to the Foreign Currency Act that would change the conversion requirement for resorts. The authority has submitted the amendments to the Attorney General’s Office, proposing to remove the existing option for resorts to convert USD 500 per tourist and instead require them to convert 20 per cent of their foreign currency revenue.
The proposed change would establish a single conversion requirement for resorts, including high-end properties whose room rates can reach several thousand dollars per night. The MMA has said the current per-tourist option can result in a lower proportion of revenue being converted by luxury resorts than by other properties.
The latest intervention comes as the parallel-market exchange rate has moved above MVR 22 per dollar. As the Maldives relies heavily on imported goods, a sustained increase in the cost of dollars can feed into higher prices for businesses and households.
